EUR/USD still looking bullish despite losing the highs

• The EUR/USD is back to the drawing board after setting new highs on Monday.
• Tensions around trade and the Fed keep ranges tight.
• The technical picture is mixed for the pair.

The  EUR/USD  is back to the mid 1.1700s after rising on Monday. The US is slightly stronger today. The pair hit new two-month highs on Monday after Mario Draghi made some hawkish comments. The President of the European Central Bank testified before a committee of the European Parliament and said that a relatively vigorous pick up in underlying inflation is seen. He also hailed rising wages and said that core inflation is set to reach 1.8% in 2020. It is currently 1%.

His words sent the pair to 1.1815, the highest since early July. The move then faded out. The US Dollar remains bid amid ongoing tensions between the US and China over trade. The tariffs on $200 billion worth of Chinese goods were implemented on Monday, and China said it would not negotiate under threats.

Also, tension is mounting towards the rate decision of the Federal Reserve on Wednesday. The Fed is set to raise interest rates for the third time this year and continue signaling a fourth rate hike in December. The open question is if the Fed will set rates above the level of inflation or only reach a neutral rate.

See:  Fed Preview: Tight or not so tight? Dollar Domination awaits

The calendar is quite light for today. One US indicator is of interest: the US Conference Board Consumer Confidence measure for September. Back in August, confidence hit the highest levels since November 2000. A small dip is on the cards now.

EUR/USD Technical Analysis

The EUR/USD is trading above the 50 and 200 Simple Moving Average on the four-hour  chart. The Relative Strength Index is pointing higher, and Momentum is positive. These are all bullish signs.

The round 1.1800 level is eyed by many, and the pair hesitated before moving above it on Monday. The 1.1815 level is the high point recorded yesterday. 1.1850 was the swing high in mid-June. Further above, the January low of 1.1915 is of interest.

1.1750 was a quadruple top back in July and provides some support. 1.1720 capped the pair on the way up and supported it afterward, a true separator of ranges. Further down, 1.1690 is of importance after holding down the EUR/USD on its way up.

More:  EUR/USD next attempt to move higher will be harder – Confluence Detector